SIP Calculator is a valuable tool that helps investors estimate the future value of their mutual fund investments made through a Systematic Investment Plan (SIP). By inputting the monthly SIP amount, investment duration, and expected rate of return, the calculator can determine the projected corpus amount at maturity. This tool empowers investors to make informed financial decisions by providing a clear understanding of the potential growth of their SIP investments.
In this article-
- Formula to calculate SIP returns
- SIP calculation examples
- Power of compounding in SIP investment
- Calculation of SIP returns in Excel
- How to use ClearTax SIP calculator?
- Why should you use an SIP calculator?
How does the SIP Calculator Work?
A SIP Calculator follows the below formula:
SIP Calculation Formula
- FV = Future value or the amount you get at maturity.
- P = Amount you invest through SIP
- i = Compounded rate of return
- n = Investment duration in months
Example of a SIP Calculator
Jane is 30 years old and works as an investor. She is thinking about how she can invest money for retirement purposes. So, Jane decides to put money into a mutual fund product via a Systematic Investment Plan.
- Investment amount: ₹35,000 per month
- Investment period: 30 years
- Expected interest rate: 8% per annum
- Frequency of investments: Monthly
Result:
With the above Formula the SIP Calculator would give following results:
- Future Value of the investment: ₹5,25,10,331
- Total Investment: ₹1,26,00,000 (35,000 * 12 * 30)
- Potential Returns: ₹3,99,10,331 (Future Value - Total Investment)
Returns from SIP Investment
The table below shows how the power of compounding can increase your returns every year with the same investment amount.
Year | Yearly Investment Amount | Total Investment | Expected Rate of Return | Total Returns |
| 2024 | Rs.60000 | Rs.60000 | 12% | Rs.4047 |
| 2025 | Rs.60000 | Rs.120000 | 12% | Rs.16,216 |
| 2026 | Rs.60000 | Rs.180000 | 12% | Rs.37,538 |
| 2027 | Rs.60000 | Rs.240000 | 12% | Rs.69,174 |
| 2028 | Rs.60000 | Rs.300000 | 12% | Rs.1,12,432 |
| 2029 | Rs.60000 | Rs.360000 | 12% | Rs.1,68,785 |
| 2030 | Rs.60000 | Rs.420000 | 12% | Rs.2,39,895 |
| 2031 | Rs.60000 | Rs.480000 | 12% | Rs.3,27,633 |
| 2032 | Rs.60000 | Rs.540000 | 12% | Rs.4,34,108 |
| 2033 | Rs.60000 | Rs.600000 | 12% | 5,61,695 |
How to Calculate SIP Returns in Excel?
Follow the below steps to calculate SIP returns in Excel:
- Enter SIP Dates: In column A, list the dates of SIP investments.
- Enter SIP Amounts: In column B, list the SIP amounts.
- Enter NAVs: In column C, list the Net Asset Values (NAV) on each SIP date.
- Calculate Units: In column D, divide SIP amount by NAV (=B2/C2).
- Calculate Total Value: Multiply total units by the latest NAV.
- Calculate Returns: Use = ((Total Value - Total Investment) / Total Investment) * 100 for percentage return.
How to use ClearTax SIP Calculator?
You can easily use ClearTax SIP Calculator by following below steps:
- Enter the Monthly SIP amount
- Now Fill out other details, Investment duration and expected rate of return
- Calculator will show you the estimated corpus with a beak-up of earned interest and invested amount.
Advantages of Using a SIP Calculator
SIP calculator India has its advantages that it offers to the investors:
- Accurate Planning: SIP calculators forecast the future growth of an investment well based on specific input criteria. It includes the amount to be funded, the duration, and the expected return. SIP calculators apply mathematical algorithms. It develops definite approximations so traders can manage their finances.
- Comparison of Several Scenarios: Changing the components of your inputs in SIP calculators, like amount, duration, and anticipated rate, means that they help users evaluate various investment conditions. They assist them in making informed choices. It is based on their economic objectives. Thus coming up with alternative investment strategies that may result in desirable outcomes.
- Visualisation of Potential Returns: Through systematic investing, SIP calculators help buyers see how their money can grow. Regarding their investing plans, graphs and charts are also available to help them understand the power of compounding. It enables them to make informed choices.
- Goal Setting and Progress Monitoring: SIP calculators aid traders in setting attainable financial targets and monitoring their progression towards them. By entering their specific financial goals, such as retirement savings or funding their child's education, investors can estimate the required investment amount. From there they can see how they progress over time.